Woolworths: back to brand building?

Woolworths: back to brand building?

Wed, 27 Jul 2016

The below article was written by BrandMatters' MD Paul Nelson for Mumbrella on the recent announcement by Woolworths.

Yesterday was another big day in the headlines for our second biggest brand. Yesterday I was interviewed by Channel 7 news about Woolworths’ decisions to cut 500 people and close about 30 stores.

Woolworths announced one of the most significant restructures in its history, with major media outlets reporting the loss of 500 jobs, closure of 30 stores and $1 billion in restructuring costs.

Social media reacted with predictable disdain, attracting many comments similar to this one: “Hi Woolies....I just read you are going to axe 500 jobs because your company is going down the pan. Why don’t you guys try something different....and HIRE more staff. Cutting staff hasn’t worked in the past, so do the opposite!!”

It has been a punishing few years for what was once the most valuable brand in Australia. A long chain of events have contributed to its decline, including the rise of Aldi, unsuccessful attempts at pricing-led strategies, such as the much maligned ‘Cheap Cheap’ campaign, corporate distraction by the troubled Masters brand and highly unpopular changes to its rewards program.

Woolworths certainly looks like a brand that has lost its mojo. It’s become the brand that many of us love to hate, and a high-profile symbol of the Australian public’s deep dissatisfaction with big corporates.

So can the brand turn this momentum around, and if so how? It certainly won’t happen fast and will require significant focus and determination from the retailer.

However, surprisingly, some clues may lie in the detail behind yesterday’s announcements. While 500 people will sadly lose their jobs, the company also announced that a further 1000 roles will be deployed into customer-facing roles. More staff on the front-line could potentially mean better customer service and a better customer experience.

And if positive customer experiences are delivered consistently over the long-term, the brand should improve, as well.

Further potential for growth lies beneath the store closure announcement: 21 stores will be closed, and the number of planned new openings will decline, which will have some impact on the all-important convenience benefit for those in the affected areas.

The upside, however, may come if this means more investment is available to upgrade existing stores. Again, this has potential to improve customer experience which, in turn, will improve the overall perceptions of the brand in the long run.

The final pieces of the puzzle lie in identifying and embracing a compelling story that Woolworths can tell about the brand, both internally and externally.

The astonishing success of the Woolworths brand throughout much of the past two decades can largely be attributed to the ‘Fresh Food People’ story, which was part brand positioning, part tagline and part employee value proposition.

It reflected a culture and a belief that permeated the entire organisation and was consistently believed and delivered on during Woolworths’ most successful years.

Defining a compelling reason for being and living it consistently, no matter what the external distraction, will put the brand in a good position to regain its mojo.

Part of this is developing a strong internal culture that will inspire motivated staff to deliver outstanding customer experiences. And if Woolworths is able to deliver on a strong brand story, backed by consistent customer experiences, this restructuring could be seen as the start of the resurgence of a once-great Australian brand.

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